When most people think of climate investing, they imagine solar farms, EV fleets, or carbon credits. What’s missing from the picture is the mountain of rubble under our feet.
The construction and demolition sector in the United States produced more than 600 million tons of waste in 2018 — double the country’s municipal solid waste. The European Union generates 820 millions tons per year, and China generates more than 2 billion tons. Globally, construction and building operations account for nearly 40% of greenhouse gas emissions, with half tied to the embodied carbon in materials like concrete, steel, and glass.
Impact investing has transformed renewable energy from a niche play into a trillion-dollar asset class. The same opportunity exists today in the built environment — if investors are willing to see construction waste not as debris to discard, but as an investable resource. The path forward is a circular economy for construction: designing, financing, and operating buildings and infrastructure so that materials retain value beyond a single use.
The problem with linear building
In my experience as a structural engineer and climate advocate, I have seen that the building industry still follows a linear model: extract, build, demolish, and landfill. Materials that could be salvaged — structural steel, façade systems, timber and intact concrete — are often discarded because reuse is inconvenient, undervalued or unsupported by current finance models.
This is not just an environmental issue; it is a financial one. More than $1 trillion in material value is wasted globally each year, representing a hidden pool of assets that could be unlocked. For impact investors looking for measurable outcomes, this linearity represents stranded value and unpriced climate risk.
The circular opportunity
A circular built environment changes this paradigm. Instead of waste, every demolition becomes a harvest and every building becomes a future material bank.
- NYCEDC’s Circular Design and Construction Guidelines are beginning to pilot deconstruction approaches that preserve material value and reduce landfill waste.
- Cambium Carbon is building local reuse hubs in US cities to give a second life to urban wood, creating jobs while diverting timber from landfills.
- In Switzerland, Neustark injects captured CO₂ into demolished concrete, mineralizing carbon and producing a carbon-negative aggregate.
- The European Union’s Circular Economy Action Plan is raising the bar, requiring material reuse and low-carbon procurement in public projects.
These are not small pilots. They demonstrate that circular construction is not just about waste management; it’s an emerging asset class with revenue, carbon value and social impact built in.
The financing gaps
Despite this promise, circularity has yet to scale. Why? Three barriers dominate:
- Capital availability. Circular startups often fall into the “missing middle.” They are too asset-heavy for venture capital, which prefers software and light-asset models, but too early stage for infrastructure lenders who demand long operating histories.
- Policy fragmentation. Rules vary by city and state, with some mandating deconstruction and the disclosure of embodied carbon and others offering little to no guidance. This patchwork makes it difficult to design standardized financial products.
- Valuation blind spots. Current underwriting rarely credits avoided emissions, waste diversion, or future reuse value. Without recognition of these benefits, circular business models struggle to compete against cheaper, linear practices.
Financing models for circularity
The good news is that investors have tools to close these gaps. A few models stand out:
- Circular Equity Funds. Pooled funds can aggregate capital for deconstruction startups, material marketplaces, and low-carbon material R&D, reducing risk for individual investors.
- Blended Finance. Philanthropic or catalytic capital can de-risk early pilots, crowding in institutional money once track records are proven. Development finance institutions have used this model effectively in renewable energy; circular construction could be next.
- Performance-based green bonds. Municipalities or companies could issue bonds where returns are linked to tons of waste diverted or embodied carbon avoided, aligning incentives with impact.
- Material leasing models. Instead of owning steel, concrete, or timber outright, developers lease them. Buildings become material banks, with components reclaimed and reused at the end of life. Platforms like Madaster in the Netherlands already create digital “material passports” that track reuse potential and could be securitized.
These models do more than plug financing gaps. They reframe circularity as a source of stable, measurable, long-term returns, not just a sustainability experiment.
Where impact investors fit in
Impact investors can play a catalytic role in three key ways:
- Integrating embodied carbon into ESG due diligence. Just as investors now scrutinize operational energy, they should demand disclosure of embodied carbon and circular strategies in real estate and infrastructure portfolios.
- Funding pilot projects. Cities like New York, San Francisco, and London are experimenting with circular construction policies. Early-stage capital can validate models and create the proof points needed for institutional scale.
- Building market infrastructure. Digital platforms for secondary steel, reclaimed timber, or recycled concrete are essential. Impact investors can help build these marketplaces — the equivalent of exchanges for reused materials.
The opportunity is not limited to developed markets. In emerging economies, construction waste is growing rapidly, often without formal recycling systems. Financing SMEs that salvage, process, and resell materials can both reduce emissions and create livelihoods, aligning perfectly with impact mandates.
Case studies that show the path
- Cambium Carbon raised $18.5 million in a Series A funding to build circular wood supply chains, combining urban forestry, reuse, and carbon credits.
- Neustark partnered with cement giant Holcim to scale CO₂-mineralized concrete, showing how startups and incumbents can align.
- In New York City, urban mining initiatives are salvaging steel, bricks, and façade systems from deconstructed buildings, demonstrating that circularity is already technically viable in dense urban environments.
- The new JPMorgan Chase headquarters, set to be New York City’s first all-electric, circular, and net-zero skyscraper, recycled, reused or upcycled 97% of the materials from its demolition — far exceeding the 75% threshold required by leading green building standards.
Each example demonstrates that the technical solutions exist. What is missing is the financial scaffolding to make them mainstream.
From waste to investable asset
Circularity in the built environment is not a niche sustainability project. It is a financial opportunity hiding in plain sight. Just as renewable energy went from experimental to investable within a decade, circular construction can become the next major wave of climate-aligned capital.
The impact investing community has the chance to get ahead of the curve. By directing capital into circular business models, investors can unlock trillions of dollars in hidden value, cut emissions at scale, and build more resilient, equitable cities.
The question is no longer whether circular construction is possible. The question is whether impact investors will seize the opportunity now or continue to let trillions of dollars in material value be buried in landfills.
Prateek Srivastava is a structural engineer at Stantec. His work spans high-rise buildings, wastewater treatment plants, and bridges, and increasingly focuses on embedding carbon-smart design across the built environment.
